Agents find property market a tale of two regions
TWO of the country's largest estate agents brought out reports yesterday on the state of the property market.
Taken together, they present a fascinating picture of a market where residential property in the best parts of Dublin is picking up, while commercial property everywhere and residential property in the regions is still falling.
Lisney says in its report that prices for houses in the best Dublin areas will increase by at least 5pc in 2013 – following an increase of 6.5pc in Dublin prices between last March and December.
Rival Jones Lang LaSalle reports that commercial property values fell 8pc last year.
Lisney says residential rents will continue to rise this year following rises of between 5pc and 16pc for some types of rental homes in the past 18 months.
Lisney's managing director James Nugent expects a "shortage of good quality apartments and family homes in the city".
However, because of higher taxes and costs on landlords, new investors will seek net initial yields of up to 14pc when shopping around for buy-to-lets.
Lisney's head of research Aoife Brennan says the lack of residential properties for sale was one of the biggest problems in 2012.
The number of apartments and houses available for sale fell by 38pc over the last 12 months with some areas falling significantly more.
Lisney's Dublin Residential Value Index fell by 64pc from the peak before hitting the bottom in March last year. Prices for flats and larger houses fell by between 65pc and 72pc from the peak.
Mid-sized, three and four- bedroom family houses fell at least 60pc over the five-and-a-half years. As our graphic shows, these houses have shown the largest increases since March 2012.
Among the reasons for falling supply are the reluctance of owners to accept current prices, their reluctance to switch from tracker mortgages in order to move house, and their inability to carry negative equity when moving house.
About 40pc of sales are attributed to executor sales after the homeowner dies, but supply may rise this year with an increase in the number of distressed sales spurred on by banks and personal insolvency legislation.
It estimates that seven unfinished estates sold for a combined €4.67m in 2012 and 17 of them are currently on the market for sale in 12 counties. Lisney expects that an even greater number will come to auction in 2013 and these are likely to appeal to cash buyers.
The firm found that spending on commercial investment properties increased 200pc to almost €600m in 2012 with overseas buyers spending 80pc of this money.
As well as the low Irish prices, investors are also responding to disappointing returns from deposit rates as well as the uncertainty of stock and commodity markets.
Meanwhile, JLL reports that investors in a portfolio of Dublin commercial properties could have achieved income returns of 9.7pc last year. This would have more than compensated for falls in the value of the JLL portfolio of industrial, retail and office properties which is used to calculate one of the most authoritative indices for these segments of the Irish market.
Values for JLL's portfolio's fell 1.8pc across all sectors in the last quarter of 2012 and by 8pc in the year.
The greatest decrease in values was seen in the retail sector in Q4 which fell 2.2pc and 9.7pc in the 12 months.
Office capital values fell 1.2pc in Q4 and 6.9pc over the 12 months while industrial values fell 1.5pc in the quarter and 4.8pc over the 12 months.